BBC BLOGS - Stephanomics
« Previous | Main | Next »

Meanwhile in the eurozone

Stephanie Flanders | 15:59 UK time, Friday, 16 April 2010

Elections are exciting sometimes - time-consuming, always. We've spent so much of this week on the campaign and the manifestos, the danger is that other stories fall between the cracks.

A total shutdown of UK airspace was hard to miss, even though it had to play second fiddle yesterday to the prime ministerial debate. But a few other things have happened as well.

On Monday, you'll remember, we had more clarity on the support that might be offered to the Greeks - a third injection of clarity, you might say, adding some details to the statements that had been made in February and March.

As I suspected on Monday, the deal gave the Greeks some relief on the markets - but not much. Their debt auction on Tuesday was oversubscribed. But the price was shocking: more than 4.5% for six months' cash, 350 basis points over short-term policy rates.

With the usual clouds of official vagueness and uncertainty hanging over the deal - and some question marks about how, exactly, the eurozone loans would be approved - Greek bond yields ballooned out again, to higher than they were before the new and improved rescue package was announced.

So, the Greek prime minister was forced to go to the IMF for real yesterday. Well, he sort of went to the IMF. True to the tradition - in this saga - of informal half-moves, signals and suggestions, the Greeks have only asked for "consultations" over the possible terms of a loan.

The IMF's chief spokesperson, Caroline Atkinson, said in her briefing yesterday that the talks could "mutate" into something more formal. For now, they are talking about a deal. And the markets remain unimpressed: Greek debt has been punished again today.

The latest edition of the Economist, out today, has an excellent briefing on the Greek crisis. I recommend that anyone interested read it in full. But to give you the headlines, they have some useful guesstimates on the scale of the funding problem for Greece, and the vulnerability of European banks to a restructuring of Greek debt, let alone an outright default.

They reckon that Greece could need official help to cover 67bn euros in new debt by 2014 - more than twice the 30bn euros so far on offer. And that's on, if anything, optimistic assumptions.

Many leading institutions are staying well clear: they think today's yields don't provide enough compensation for the risk of default.

I still think a restructuring of Greek debt is more likely than not over the next few years. But the article shows just how painful that would be for other eurozone countries; more specifically, its banks.

Using the back of a fairly sophisticated envelope, the Economist reckons that eurozone banks hold nearly 60% of foreign holdings of Greek government bonds, worth maybe 70bn euros. French and German banks are especially exposed. They think UK banks hold less than 5% of it, an exposure of around 6-11bn euros,

So, in a sense, France, Germany and the rest are bailing out Greece, so they won't have to bail out their own banks at an even greater cost.

But this may not be what many economists would call a sustainable equilibrium. Especially when the ECB has just told eurozone banks they can continue to put up Greek and other low-rated sovereign debt as collateral on cheap loans. The maths on a 30bn euros loan looks much worse if it doesn't, in fact, prevent a restructuring down the road - and France and Germany end up having to bail out their banks as well.

Will the eurozone ministers meeting today (or the full Eco-Fin meeting this weekend) produce a more lasting solution? I seriously doubt it.

At bottom, the Germans have always wished they could let Greece solve its own debt problems, even if that meant some form of 'haircut' for investors, or outright default. That was what the "no bail-out" provision for the eurozone was supposed to mean.

The exposure of German banks makes this less thinkable, for now, especially with other parts of the eurozone so weak. But key German officials do not want to rule it out.

Why? Well of course they think that countries should pay for their mistakes. But the larger reason is that, once you say there is a fiscal safety net in the eurozone - you're walking yourself in the direction of fiscal union. At some level, every government of the eurozone would be on the hook for everyone else's debts.

Famously, that's where the French always wanted a single currency to lead. Equally famously, Germany did not. And we wonder why the Greek situation takes so long to resolve.

In the meantime, investors' thoughts turn, naturally, to the question of who will be next. For a while I've been talking up Portugal as the country most likely to come under serious pressure. That's partly because I know that the European Commission and the ECB think so as well.

This week Simon Johnson and Peter Boone - two seasoned watchers of financial crises - also pointed the finger at Portugal.

Watch the election, by all means, but keep your eye out for troubles in Lisbon as well.

Comments

Page 1 of 4

  • Comment number 1.

    Stephanie - this is the real news.

    http://news.bbc.co.uk/1/hi/business/8625931.stm

    Goldman caught out in the end - SEC begins a war against the state of Goldman!

    Apparently betting against your clients is a naughty thing - but these poor bankers didn't know it!

    Couldn't happen to a nicer set of chaps.

    IMF greece bailout Monday.

  • Comment number 2.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 3.

    Ah, Stephanie, you have made Yuri hide under table. He is say, it the end, the END, the EEEENNDDD!!!!! He is point to strange omens.

    First, on TV last night is leaders debate, and Cameron head is glow like ghostly vision, while Brown is thunder as Old Testament Prophet. (Clogg is vicar.) Then is Greeks, they not bear gifts, they have no money, but they got plenty Cassandras now say it all over. Then is Iceland portent of eruptings from underworld and ghastly clouds in sky. (True, not as many bankers suiciding as we would expect – or want – but you is not have everything.)

    And then incredible! Yuri, my assistant in butcher’s shop, today is cut into lamb make chop. And what is happen! There is face on chop! And number 666! And we is gasp and swoon. And when we recover, biggest surprise is that Antichrist is woman.

    But then we think. When did we first hear tidings of her and her doings? Shortly after crisis is reach peak. And she is speak in tongues, so strange no one is understand.

    So, she who portend End of Times is among us. She has come out of a cold land and her followers are many. And she is hockey mom with glasses. And right-wing views. No more clues, but if you are in Alaska and have access Daggers of Megido, you are know what to do.

    Message to religious leaders and Satan worshipers. Sorry, no relics. I have business to run here. We sold chop to Blind Olga two hours ago. She eat by now.

  • Comment number 4.

    I really dont see this ending well for greece and by extension for the EU single currency nations.

    Greece have such ridiculous debt rollovers planned this summer and their bond yields peaked to a new high today at over 7.4%

    I love how the EU and Greence think just empty rhetoric will make this problem go away. The markets are not stupid, do politicians honestly think they can hoodwink the market into charging greece elss therefore reducing the requirement for greece to actually use the ECB/IMF loans?

    No

    Greece will go to the IMF, it will borrow a full 30 billion euros from the ECB and it will still not be enough as they havent got the bottle to enact the austerity plan to get their deficit sorted.

    Couldn't have happened to a nicer bunch of folk to be honest, but it looks liek some serious tensions in the Union over the next few years.

  • Comment number 5.

    Greek default would be a good thing to see. Would like the banks to suffer in some way for the problems they have created. Would be interesting to watch the banks go to the other governments for another bailout and see how well that would sit with the public. One day the chickens will come home to roost and the political leaders and unethical bankers who caused this all will pay some price.

  • Comment number 6.

    Hey Steph,

    Tough day for you today. Trying to concentrate on the banalities of the Election must be difficult whilst the Euro is coming apart at the seams and Goldman Sachs are finally being brought to book.

    Dominos?

  • Comment number 7.

  • Comment number 8.

    The Greek predicament is an interesting example of escalating government debt getting out of control.

    It makes you shudder when you think of our escalating government debt as Mr. Brown tries desparately to pretend that all is normal and the only requirement that the government must apply to resolve matters is to pursue efficiency savings! What is more he has at least 30% of the population agreeing with him.

    The worrying factor in all this is that the plans of every government seem to revolve around an assumption that growth will be restored thus allowing the deficits and the debts to get gradually easier to resolve.

    Economic growth requires more than just simple demand; it requires new and expanding markets which add value and thus draw forward investment. Given that recent stock market growth has been more about cash returning to buy assets previosuly dumped to generate the cash, where are those new and expanding markets these days?

    There is more debt about globally than there is money to soak it up. Interest rates have to go up and any recovery will consequently stall. No wonder our politicians are keeping schtum!

  • Comment number 9.

    1. wotw...agreed
    Greece is so yesterday
    http://www.zerohedge.com/article/breaking-sec-charges-goldman-sachs-fraud-subprime-mortgages

    I hope they go town on Paulson

  • Comment number 10.

    #5 "Greek default would be a good thing to see. Would like the banks to suffer in some way for the problems they have created"

    Isnt the problem in Greece simply that the Greeks decided to spend like crazy and worry about how to pay for it all later? Sure the banks may have helped to hide the magnitude of the problem with the infamous currency swaps, but the Greeks managed to run up the debt all by themselves.

    Personally I suspect that rather than an outright default there may be an agreed haircut to write the real debt down by 30-40% which would allow the Greeks a chance to work their own way out of their problems.

  • Comment number 11.

    "I really dont see this ending well for greece and by extension for the EU single currency nations."

    =======================================================================

    The growing pains of a young currency; this crisis will put hairs on it's chest.

    'Growing pains' not to be confused with 'death rattles' which is the sound coming from sterling, a sound that will increase as we fail to tackle the deficit.

    As posted before Greece GDP is tiny compared to total EU GDP. Let the IMF sort them out; this would be preferable for Greece than leaving the Eurozone.

  • Comment number 12.

    5. At 4:52pm on 16 Apr 2010, ghostofsichuan wrote:
    Greek default would be a good thing to see. Would like the banks to suffer in some way for the problems they have created. Would be interesting to watch the banks go to the other governments for another bailout and see how well that would sit with the public. One day the chickens will come home to roost and the political leaders and unethical bankers who caused this all will pay some price.
    >>>>

    Well - might not be so great - UK banks and possibly UK government has exposure to Greek Sovereign Debt - default would cause more problems for us at home.

    Still,

    I don't think it will be allowed to default - too much rides on continued merry go round of debt - once one goes might be a domino effect.

  • Comment number 13.

    8. At 5:04pm on 16 Apr 2010, stanilic wrote:
    The Greek predicament is an interesting example of escalating government debt getting out of control.

    It makes you shudder when you think of our escalating government debt as Mr. Brown tries desparately to pretend that all is normal and the only requirement that the government must apply to resolve matters is to pursue efficiency savings! What is more he has at least 30% of the population agreeing with him.

    The worrying factor in all this is that the plans of every government seem to revolve around an assumption that growth will be restored thus allowing the deficits and the debts to get gradually easier to resolve.

    Economic growth requires more than just simple demand; it requires new and expanding markets which add value and thus draw forward investment. Given that recent stock market growth has been more about cash returning to buy assets previosuly dumped to generate the cash, where are those new and expanding markets these days?

    There is more debt about globally than there is money to soak it up. Interest rates have to go up and any recovery will consequently stall. No wonder our politicians are keeping schtum!
    >>>>

    Too true. Major debt hangover will take a number of generations to clear (if ever!)

  • Comment number 14.

    In terms of the Greek crisis, the biggest problem the EU has is with Germany. There is so much infighting going on there: one camp favours helping Greece, the other not. Merkel is, meanwhile, stuck in Lisbon (Icelandic volcanic ash).

    Meanwhile, the markets are just - well - nervous about the whole affair. And, to judge by the Economist article, have every right to be.

    And yet - Estonia still wants to join the Euro in 2011. Why, one might ask?

  • Comment number 15.

    The mounting concern (or glee on here) over what might emerge from the civil suit against Goldman Sachs is a bit premature. They may well admit to a bit of dodgy packaging of an investment vehicle, if that happens they will get a (probably negligible) fine and a slap on the wrists. Not so much a 'don't do it again' more of a 'don't get caught again'..move along, nothing to see here...especially with so many of their previous employees ensconced in positions of authority at the Fed and with their huge lobbying power in Washington.

  • Comment number 16.

    I have noticed that some Ecomomist are how beginning to start and think very seriously about the latest Greek Eurozone Bail-Out package Plan, with many commentators saying that we are now approaching "The End" of The Euro as an independent currency, and that Germany might well be the First Eurozone member to jump ship.

  • Comment number 17.

    Thanks for the update Stephanie. I am guessing that there is some correlation between this news and the markets dropping today.

    I have some sympathy for the Greek people due to the apparent endemic corruption of previous governments (forget Goldman Sachs for a moment). However, the austerity plan should have been put into place a lot sooner. The Greek people are going to have to accept a much lower standard of living pretty damn quickly.

    Defaulting on their debt would be a complete non-starter as they still need to borrow heavily from the markets. The spectre of default doesn't seem to want to go away though. It is quickly becoming a self fulfilling prophecy. As the Greek bond yield ratchets its way up, the debt service becomes more and more of a burden. Investors become more worried about their ability to repay and the yield goes up even more. The lack of coherent and consistent communications doesn't help either.

    It highlights the danger of not dealing with the deficit and it makes the argument about cutting 6bn pounds out of government spending in the UK look pretty pathetic. The tories were right the first time about the need to cut deeper and faster.

    To anyone who thinks that a debt crisis is not likely to happen over here, think again. We have not started to approach the markets for the large quantities of cash needed yet due to QE.

    It also highlights the stark contrast between the actions taken by the Irish government. Their decision to take drastic action to reduce the deficit has caused a lot of short term pain. However, they have managed to avert their own debt crisis. Maybe unemployment is a price worth paying (maybe JFH is right too).

    On a side note, I would be interested to know which UK banks were stupid enough to invest in Greek bonds. Its no wonder they needed bailing out. Greek government bonds are starting to make sub prime debt look sexy.

  • Comment number 18.

    Goldman Sachs has charges filed against it.

    Stephanie, why have you missed this story? I pointed it to you a couple of weeks ago, but you chose to ignore my hints. Why did you not connect the dots and scoop the biggest story of the financial scandal??

    Best

    George

  • Comment number 19.

    What nobody is saying is that the Germans welcomed the crisis so that the euro would fall and their exports would rise . Had they agreed to supporting Greece and subsequently the euro earlier , it wouldn't have come to this . Now the whole thing has turned around and it is about ready to bite them where it hurts . Let's see how they are going to save their banks , when Portugal and Spain come into the firing zone .

  • Comment number 20.

    Justin150:
    You may have noticed that almost every country was over-spending during the bankers created false boom...check current national debt figures and bailout. Greece certainly has its own politics and decision-making, they just did the Greek thing and had a bigger party than the rest. There are many who believe that the end or bottom has yet to be reached while the bankers pay themselves bonuses like squirrels storing up for the winter to come.
    The Euro was an invention of the bankers. It was to make it less expensive for them to transfer funds. Increased profit and reduced costs..none passed on to customers in the banking tradition of "a fool and his money are soon parted."
    Now the governments hestitate to put in place the regulations and controls to prevent this from happening again.
    Even a child knows not to stick their fingers on a hot stove twice...apparently governments do not.
    It is astonishing that all these economic rationales and market formulas and new financial instruments are outlined in such great detail and add a couple of economists charts, when it was not really any different than what a common thief does. Exact same motivations.

  • Comment number 21.

    #19
    "What nobody is saying is that the Germans welcomed the crisis so that the euro would fall and their exports would rise "

    ===================================================================

    This is a very simplistic argument.

    A rising Euro is less bad for Germany than a falling one, the latter puts import costs (raw materials) and inflation up.

    During the DM era when the DM strengthened from 11 to the £ in 1960 to 3 to the £ in 1990 exports marched ever upwards. When you make the best machine tools in the world all it means is that countries pay more for them if the exporting country's currency appreciates; they still buy.

    Nice conspiracy theory though.

  • Comment number 22.

    #20
    "The Euro was an invention of the bankers. It was to make it less expensive for them to transfer funds"

    ====================================================================

    Are you sure about this. The more currencies the more money banks make from currency exchange.

    I imagine the banking class hate the Euro. A world currency would drive them to suicide.

    The Euro was a political invention with the purpose of driving forward EU cohesion - fiscal union next.

  • Comment number 23.

    Thank goodness we were not stupid enough to join the Euro

    As opposed to this being growing pains, it is the start of the current euroland as we know it

    No way Greece will be able to sustain the conditions laid down by the IMF

    When they leave, it wouldn't be a surprise if Portugal left

    Then where is it?

    Up that creek

  • Comment number 24.

    The SEC v Goldman Sachs is a test case, and the SEC have no chance

    They couldn't even deal with the two Bear Stearns guys

  • Comment number 25.

    24. At 9:36pm on 16 Apr 2010, Kevinb

    no chnance because???

  • Comment number 26.

    Look at the case where the 2 guys charged got off...the evidence was pretty damning, and they still lost

    GS will have the best legal team going, and as we know, that alters the ball game somewhat

    As well as unlimited funds

    I do not say that is right, simply that it is inevitable

  • Comment number 27.


    Signs of unrest in Tory Camp over Cameron's leadership and his disastrous showing in the first debate. Latest polls show Con 33% LibDem 30% Labour 28%. Seats projection has Labour as biggest party.

    Will Cameron be leader of the Party come October; bet he regrets pushing for the debates the way he did.

    Early days but the most interesting election for decades.



  • Comment number 28.

    #22. Richard Dingle
    #23. Kevinb

    Shall I presume to compare and contrast:

    In #22 Richard Dingle rightly makes the financial point "The more currencies the more money banks make from currency exchange. I imagine the banking class hate the Euro. A world currency would drive them to suicide."

    Yet in #23 KevinB says "Thank goodness we were not stupid enough to join the Euro"

    So if both are right in what they write it is logical to conclude that KevinB wants bankers to make oodles of dosh out of us!

    Kevin B should explain why he loves bankers so much shouldn't he?

    But as a loyal Tory, and slave of Central Office, he will be good at one-liners and sound-bites but have absolutely no substance behind the façade - the lights are on, but no-one is at home, just like their manifesto all hard cover - but nothing inside!

  • Comment number 29.


    Goldman Sachs are not too big to fall. If they vanished off the face of the earth would they be missed.

    There is considerable anger on Main Street and people want a lynching; at the very least they are entitled to closure.

  • Comment number 30.

    28

    Isn't it a bit late for you to be peddling your spite and venom?

  • Comment number 31.

    #28
    "Yet in #23 KevinB says "Thank goodness we were not stupid enough to join the Euro"

    ======================================================================

    Unable to see KevinB post as I have installed anti-rant software.

    The language is self-defeating 'stupid enough to join'; are we to assume that France, Italy, Netherlands, Spain, Germany, et al are 'stupid'.

    The Euro is a young evolving currency and will surmount the current crisis. Fiscal union is a more likely scenario than Eurozone implosion.

    Certain sectors of UK society want it to fail for political reasons.


  • Comment number 32.

    On the day that Tesco announce better than expected bumper profits and hot on the heels of spiv Dave's sound beating last night it is timely that the Greek financial crisis has saved Stephanie from setting out the unfolding weakness in Gideon's ill-founded scaremongering tax on jobs claim. Boy George is ashen faced.

  • Comment number 33.

    Ms. Flanders has also not said anything about this story:

    http://www.imf.org/external/np/sec/pr/2010/pr10145.htm

    The IMF wants to increase the capacity of it's lending facility from $50B to $500B, that's a factor of 10.

    Reasons? And where's the money going to come from? The G20? Maybe Greece will pay for its own bailout. :)

    #3 Konnolsky - LOL, you made my day.

  • Comment number 34.

    Thanks a lot for specifically targeting portugal. You and your friends at the NYT have probably cost my country another few million euros with all this gloom and doom. Why don't you target Belgium for example, with a much higher debt to gdp ratio of over a 100% or France with a debt/gdp ratio that's about the same?
    It's become quite obvious that the markets are testing europe, which at this point doesn't have the leadership it needs. I fear that angela merkel being a nice lady doesn't understand the testosterone culture in the london and NY financial centers. Chirac and Shroeder would do a lot better.

  • Comment number 35.

    @21
    If you had bothered to read the news , you would know that Germany's exports increased sharply in February . Do you still insist on calling my post a conspiracy theory ??
    As for the parity of the Dm vs the pound from the sixties to nineties , this is ancient history and has nothing to do with today's deregulated markets . So who is being simplistic now , not to mention simple ??

  • Comment number 36.

    32 Kinkyboots

    "On the day that Tesco announce better than expected bumper profits"

    What has this got to do with the price of fish?


    " and hot on the heels of spiv Dave's sound beating last night"

    One swallow does not a Summer make for Cleggy boy. He has nothing to lose and the most to gain from these debates. He can also promise us the Earth, but he just looks too naive. If there was a big loser from the debate it was Brown. I felt genuine pity for him. He looked like a punch drunk boxer taking punishing blow after blow from his two nimble opponents.


    "it is timely that the Greek financial crisis has saved Stephanie from setting out the unfolding weakness in Gideon's ill-founded scaremongering tax on jobs claim."

    If you haven't understood the arguments as to why the NI tax is detrimental to employers' ability to take on new workers, you never will.


    27 RD

    Did you get those poll results from the copy of your Daily Mirror, because I have seen vastly different ones elsewhere.

  • Comment number 37.

    Ms. Flanders,

    >>On Monday, you'll remember, we had more clarity on the support that might be offered to the Greeks - a third injection of clarity, you might say, adding some details to the statements that had been made in February and March.

    Perhaps a better word to use, IMHO, is "clarification(s)" rather than "clarity" since everything is still very unclear. They can keep throwing out "clarifications" while leaving everything hanging in the air !!

    It is unclear whether the Greeks will be able to "sell" their next tranche of debt instruments. It is also not clear at what price/interest rate they will get for that tranche, if they do sell it. It is still unclear whether they will draw-down on the promised EU-IMF loan since the IMF are already in town. Why add an extra layer of (EU) control when they can go diect to the IMF, as they've been forced to by circumstances.

    >>Famously, that's where the French always wanted a single currency to lead.

    Even more famously, they want the French in charge !! I believe that's why Frau Nein offered the French the chance to bailout the Greeks on their own, which the French rapidly declined. If the Germans do the majority of the bailouts, then they'll end up with the biggest say in the Euro, something that French national pride will not allow !! Unfortunately, the French can't afford that big a baliout on their own either !! Hence the EU-IMF package !!

    >>Watch the election, by all means, but keep your eye out for troubles in Lisbon as well.

    What has not been considered is that a "White Knight", in full Samba gear, might come riding by to bailout their co-linguists. They, proudly, lent the IMF a few billions last year and, I believe, they are willing to spread their wings on the world stage (if you'll forgive my mixed metaphors) !! After all, they've cornered the World Cup 2014 and the Olympics 2016 !!

    It might be more profitable to keep an eye on other slightly dodgy economies, like Britain's, for instance !!

  • Comment number 38.

    Kevinb

    "Thank goodness we were not stupid enough to join the Euro"

    If we had been in the euro, up until recently we would have experienced even lower interest rates. This would have made the housing boom over here that much worse.

    The euro is built on lies. There was always going to be too much divergence between the economies. Greece are going, going, gone. Portugal is going to be the next domino, shortly followed by Spain.

    Excuse me, I need to go and sharpen my short selling knives.

  • Comment number 39.

    11 RD

    "'Growing pains' not to be confused with 'death rattles' which is the sound coming from sterling, a sound that will increase as we fail to tackle the deficit."

    The 'rattles' are getting quieter after GB's dismal showing in the debate.

  • Comment number 40.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 41.

    #9 >>I hope they go town on Paulson

    I think you've got the wrong Paulson - http://news.bbc.co.uk/1/hi/business/8625931.stm

    "The firm's owner, John Paulson - no relation to former US Treasury Secretary Henry Paulson...."

  • Comment number 42.

    #14 >>Merkel is, meanwhile, stuck in Lisbon (Icelandic volcanic ash).

    I have serious doubts about that reason since, in her high-tech air-conditioned Mercedes, she can drive back to Berlin without little inconveniences like a large ditch to sail across !!

    >>And yet - Estonia still wants to join the Euro in 2011. Why, one might ask?

    Masochism ?? They been kicked around by the Soviets for so long, they might as well be kicked around by the Europeans as well !!

  • Comment number 43.

    #16 >>...and that Germany might well be the First Eurozone member to jump ship.

    Alternatively, they might be "Primus inter pares", first amongst equals !! This might rather irk the French.

  • Comment number 44.

    #20 >>You may have noticed that almost every country was over-spending during the bankers created false boom...

    Almost but not quite !! - http://news.bbc.co.uk/1/hi/business/8619548.stm

    This will have a knock-on effect on the Chinese Yuan.

    Oh, that we have such problems !!

    >>Even a child knows not to stick their fingers on a hot stove twice...apparently governments do not.

    It's called "democracy" !! They keep electing a different fool every time and the elected fools keep sticking their fingers on the hot stove everytime !!

  • Comment number 45.

    #27 >>Early days but the most interesting election for decades.

    Yup !! I just painted my walls and this election is certainly more interesting !!

  • Comment number 46.

    #33 >>And where's the money going to come from?

    Check that same website and you'll see where !! Either through subscriptions of its members or through loans.

    If it's through subscriptions, then Britain and America is in deep doo-doo. Britain has roughly the same amount of voting shares as China and America has 5 time as much. And the IMF wants *cash* (In God, we trust; all others pay cash) !! No "QuEasy" money, please !!

    And, to be fair to Strauss-Kahn, he's merely battening down the hatches for the storm that he *knows* is coming !! Greece is merely the first breezes, Portugal may be a stronger blow; and then comes the real storm !! Britain ?? Italy ?? Spain ??

  • Comment number 47.

    #35
    "If you had bothered to read the news , you would know that Germany's exports increased sharply in February

    =====================================================================

    Nothing to do with the Euro more to do with world trade - there was a bounce in Dec - Feb.

    Any trade in February at any rate, due to forward currency agreements, would not reflect recent Euro movements.

  • Comment number 48.

    Richard Dingle

    If your 'anti-rant software ' prevents you from seeing my posts then don't comment on them

    We all know you are a non-dom, and love the Euro

    That is your view, which I vehemently disagree with on economic grounds

    You said...

    The election would not be on May 6th

    That we would have Euro/$ parity by now

    Actually, since you made those comments, and I said it would head the other way it has

    Either comment on my post with manners, or don't bother at all

    I said joining the Euro would have been stupid

    I did not say you were stupid for wanting to join

    Please realise the difference, and if you cannot be pleasant then just don't comment

  • Comment number 49.

    #39
    "The 'rattles' are getting quieter after GB's dismal showing in the debate. "

    ========================================================================

    Almost all the commentators seem to be saying that it was a disaster for Cameron

    #36
    "Did you get those poll results from the copy of your Daily Mirror, because I have seen vastly different ones elsewhere."

    It was I agree just one poll (YouGov/Sun - skewed in favour of the Tories) and it is early days I agree. I tend to take polls with a pinch of salt though some less than others.

    The LibDems (I do not vote for them) have had spectacular spikes before but not in General Elections - this election is turning out to be very different I feel. I don't take the Mirror or any of the 'red tops'. A lot of people thought the Leaders Debates would have an impact; of course there is every chance Clegg will tank in the next two.

    Please carry on sharpening your short selling knife - I will be doing the same but with a different target.

  • Comment number 50.

    32

    You seem to be getting just a little carried away

    Cameron did not get a sound beating, he chose not to attack, which left him isolated in the Gordon loves Nick love in

    In a three round series, let's see what the situation is after round three

    I believe you are a labour supporter, so I wouldn't have thought you have too much to crow about currently

    Were you impressed with Brown?

    Seriously?

    He was aggressive and rude, and kept over speaking

    If he thinks taking £6bn 'out of the economy' (which is wrong anyway) is a threat to this pretend recovery, How does he think we will cope with taking £85bn in interest payments alone for the debt he is running up will do to the economy?

    This is an increase of £50bn from current interest payment levels in just 4 years (by 2014/5)

    Would you care to answer that question?

  • Comment number 51.

    46

    Spain, due to unbelievably high unemployment rates, and economic slavery to the euro

  • Comment number 52.

    @47
    Well Mr Dingle , seems that you ain't done your homework . There was a plethora of statements from high ranking German officials last year (well before the Greek crisis) complaining about the high value of the euro .
    And the fact that the parity of the Euro vs the USD was 1.52 in Dec.09 and has fallen to 1.33 - 1.35 , has nothing to do with the German exports ? That's a more than 10% devaluation which is hugely helpful for them .
    Now if you still think that all this is a coincidence , try thinking harder .

  • Comment number 53.

    #52
    " There was a plethora of statements from high ranking German officials last year (well before the Greek crisis) complaining about the high value of the euro ."

    =======================================================================

    I did read these comments. You really have to take them with a pinch of salt - and look at the politics.

    Also you must look at the effect of a weakening Euro on imports and inflation; the Germans are particularly paranoid about inflation.

    As for exports the Germans tend to make high added value artefacts that can not be easily sourced elsewhere. If this country had a decent export base then it could exploit the situation.



    "And the fact that the parity of the Euro vs the USD was 1.52 in Dec.09 and has fallen to 1.33 - 1.35 , has nothing to do with the German exports ? That's a more than 10% devaluation which is hugely helpful for them ."

    The time lag is too short Dec -> Feb. They are not selling baked beans.

    If you can give me some evidence of falling German order books then I will take your comments seriously. Of coursr all things being equal a depreciating currency will help exports, an appreciating currency won't necessarily harm exports. Margin will be maintained with cheaper imports,

    History shows that an appreciating currency does not stop exports rising so long as you produce things people want as my example of the old DM.

    Finally, the Germans are perfectionists and this tends to make them the biggest moaners in the EU when anything is not quite the way they think it should be.

    Good luck with the IMF. Greece is a resourceful country and will overcome their current difficulties. They have overcome far greater challenges in their long and splendid history.


  • Comment number 54.

    #53

    I forgot to add that one of the problems of the EU economy is that German exports are too strong and German domestic demand not strong enough to help other EU economies.

  • Comment number 55.

    #53

    "If you can give me some evidence of falling German order books "

    That should have read...

    'If you can give me some evidence of falling German order books before the recent 10% drop against the USD after filtering out falls due to world trade slow down.'

  • Comment number 56.

    Stephanie,

    I note a change in your tone when discussing the Greek debt situation. About time really. We appear to be reaching an end game.

    It is also an arguement that you and other bloggers have made many times that the size of the Greek debt in relation to European GDP is very small suggesting one large bung and the disaster is averted. Ths is still doing the rounds in the same way as people still say if Lehmans had been bailed out things could have gone back to 'normal' without a credit crunch. Others comment on German priority being around preserving the level of the Euro. Who can say anything for sure.

    Looking at the wider situation I consider Greece now to be the national equivalent of Lehmans September 2008. The music stopped and they had nowhere to sit.

    Many rightly believe that if Greece default this will be the trigger to a much wider malaise. The fact is that Portugal, Spain and Italy owe collectively £1.3 trillion of which 46% is owed to German and French banks. This is the driving force guiding their actions not the relatively small sums involved in saving Greece.

    Portugal and Spain have severe problems which would quickly become critical if Greece defaults. At the same time it is hard to see any alternative to simply bailing Greece out. However, doing so does not begin to solve the problem. It simply delays the inevitable. The problem being as old as time - if one lives beyond their means for long enough in the end they will have no means or means to borrow.

    Best to make cuts rather than waiting to be cut off.

    In the end Greek will probably default or levels of spending cuts will have to be made that go well beyond anything we have seen to date. None of this is new.

  • Comment number 57.

    Does anyone know what post#3 @4:44pm 16 April is trying to say?

    However, it's heartening that all views are welcome on the BBC blogs.

  • Comment number 58.

    #56
    "The fact is that Portugal, Spain and Italy owe collectively £1.3 trillion of which 46% is owed to German and French banks. This is the driving force guiding their actions not the relatively small sums involved in saving Greece."

    ======================================================================

    How much is owed to UK banks just out of interest. And is Greece as big as Lehmans was.

    I would also caution against grouping Spain and Italy with Greece and Portugal. I would group the UK and Ireland with Greece and Portugal.
    Spain has very high unemployment, granted, but how many were employed or even measured as such 20 years ago. Italy has a smallish deficit but very high debt (120% of GDP) - Italy is Italy. The UK is heading towards a hung parliament. Ireland is cutting the deficit but also cutting GDP; % remains the same.

    PIIGS should read GUKIP.

    If the doomsday scenario does unfold it will damage far more than the Euro and EU. One way of looking at the EU is that it is a container that channels German energy in a constructive way. That has been recent history. Best to keep the Genie in the bottle.

    Ironically the country in the EU that needs the EU least - economically - is Germany. They need it to work politically.

  • Comment number 59.

    It is tragic that the post-war 'political' peace in Europe model of the European Union was turned into an 'economic' model with the 'enforced currency of the Euro'?

    This 'common currency model' was pushed by France, who apparently, invented VAT too - the scourge of the most poor and low-income families across the European Union, including UK.

    The European Union is not America - although the unelected 'big ideas' Eurocrats decided to emulate the USA model of a single currency? Water and oil - so much damage has been done?

    As for Greece, Portugal, Spain and others? If African nations can have their 'crippling debts 'cleared' to start afresh - why can this not happen in the EU? Yes, perhaps this is naive - but why not????

  • Comment number 60.

    #3, Konnolsky, has read the situation correctly.

  • Comment number 61.

    A great piece Ms Flanders. Plenty of readable information; some analysis plus links and well-structured comments for 'everyone' to access and consider.

  • Comment number 62.

    59

    It was always a German-Franco plan to neuter the UK

    German arrogance and French pride will undo it

    Trying to create a USE is absurd, and it will all end in tears

    The Euro is doomed, and will contract, not expand

  • Comment number 63.

    #60
    "#3, Konnolsky, has read the situation correctly"

    Konnolsky for PM

    #62
    "It was always a German-Franco plan to neuter the UK"

    ======================================================================

    It worked then.

    Of all the big players in the EU I cannot think of a more neutered one than the UK; thogh I think it was more self abuse.


  • Comment number 64.

    #59
    "As for Greece, Portugal, Spain and others? If African nations can have their 'crippling debts 'cleared' to start afresh - why can this not happen in the EU? Yes, perhaps this is naive - but why not????"

    ========================================================================

    Interesting idea.

    If every country on the planet reneged on their sovereign debt which ones would be the net loosers. How would it unwind. Its only paper money after all.

    Go for it but can I have a 24 hours heads up so as to make arrangements.

  • Comment number 65.

    #59
    Some developing companies have been released from country to country debt but only because they really could not pay it back and because in many cases it was acquired and largely stolen under dictators who had often been western backed.
    These countries had already endured the type of IMF / World Bank restructuring / austerity programs which the PIGS are trying to avoid. They were also very much poorer and the sums much smaller. Also this took place long after the original defaults.
    There really is no comparison.

  • Comment number 66.

    This volcanic situation could go on for weeks or months.
    Bankrupt airlines? Bankrupt tour operators?
    And how long before European governments declare a "state of emergency" to repatriate stranded families to their homelands(overland and by sea).
    Stranded people losing their jobs?
    Stranded people running out of money?
    No accomodation?

  • Comment number 67.

    @53
    I wouldn't take their comments with a pinch of salt , because usually Germans mean what say . And they were quite worried for the following reason : China , Germany and Japan are the largest world exporters . It used to be that China made cheap and cheerful products , while Germany and Japan made high value & high technology products . In the last few years though China has been moving fast (aided by western investments) to produce more high end products . Add to this the fact that RMB is tied to the USD and the USD has constantly been sliding against the Euro for the last couple of years and you can see why the Germans were upset . No matter how one tries to disguise it , the fall of the Euro is a godsend for them . As for the time lag , I don;t see the Euro going up soon . There are rumors that hedge funds are betting on a Euro/USD parity of 1.25 . Now that wouldn't be a bad thing for Europe - especially Southern Europe . Their tourism industry has been taking a beating - a falling euro might help to redress the issue .

  • Comment number 68.

    #67
    " In the last few years though China has been moving fast (aided by western investments) to produce more high end products "

    ======================================================================

    This is a good point and one I have made several times on this board basically within the context of whether the UK can catch-up and keep-up. The omens are not good.

    The Chineese are well educated and skilled, and have a sense of purpose and I would expect them to dominate certain economic sectors - in particular electric cars. Economic survival is all about climbing up the value-added export table.

    By time lag I meant that it will take time for a weak Euro to feed into export stats. Feb really is too early. German order books now and in the next few months will reveal the truth, all things (world trade levels) being equal.

    Personal debt is low in Germany (not as low as Japan) and the Germans should consume more to adjust trade balances.

  • Comment number 69.

    #66
    "This volcanic situation could go on for weeks or months"

    =====================================================================

    Must be frustrating for BA strikers. No one will notice :)

  • Comment number 70.

    66

    This is why global warming is just more tripe

    James Havelock's Gaia Theory is unfortunately the more accurate, and it is too late for us to do anything with the climate, and being arrogant enough to think we can is somewhat odd

    It is also an example of the hostage to fortune point that Portillo made on This Week

    We have no control over anything currently, other than the overspending which is why it must cease

  • Comment number 71.

    It seems to me, as perhaps others have already stated, that the money people rule the World. They are bigger than any single government. Is it time for a World Government?

  • Comment number 72.

    #71
    "It seems to me, as perhaps others have already stated, that the money people rule the World. They are bigger than any single government. Is it time for a World Government?"

    =====================================================================

    We have it already.

    Goldman Sachs - busily doing God's work.

  • Comment number 73.

    71

    That is the very thing we don't need!!!

  • Comment number 74.

    #71
    "Is it time for a World Government?"

    ======================================================================

    With the Euro as currency.

    Hmmm. I like your thinking.

  • Comment number 75.

    Dr Doom - like the Tory's campaign you are floundering. That price of fish I was refering to is the £3bn profit Tesco have posted. Your credibility is fatally flawed. If you really think that the increase in NI will stop Tesco and their ilk from taking on new staff to keep obscene profits rolling in for shareholder dividend then you're also living on Gideon's fantasy island. Tesco are probably planning a new store there....

    As spiv Dave says "We're all in this together". They are - up to their necks

  • Comment number 76.

    75

    I don't think using a Company the size of Tesco as a typical example is a particularly good idea, to be honest

    Presumably you would like Tescos to go bust, and the just under half a million Tesco Employees to be unemployed?

  • Comment number 77.

    #75
    #76
    "If you really think that the increase in NI will stop Tesco and their ilk from taking on new staff"

    does not mean

    "Presumably you would like Tescos to go bust, and the just under half a million Tesco Employees to be unemployed"

    The decision to take on new staff depends on whether the incremental profit they add will exceed their incremental cost - 1% is neither here nor there.

    VAT would be worse for companies like Tesco - a lot of the high value items are standard rated.

    Not withstanding that, I have already posted that NI has had its day. Use income tax and corporation tax instead.

    Cameron and the Conservatives are being found out. Nothing to say on the deficit, plenty of gimmicks, tax giveaways for their rich friends, and the nasty party coming out of the closet.

    Cameron was the clear loser on Thursday (I was genuinely surprised because he is a very good speaker). He looked out of his depth. Brown was clunky Brown - a par performance. Clegg seized the moment.

    The next debate will be fascinating. Clegg and the LibDems are not tainted by Iraq. Cameron can only get better. Worse is not possible or is it.

    Hung parliament here we come.

  • Comment number 78.

    74. At 1:53pm on 17 Apr 2010, Richard Dingle wrote:

    With the Euro as currency.

    Hmmm. I like your thinking.
    ________________________________________________________________________
    I suppose you are right that the original blog was about the Euro. It may be going down and there seems to be mixed feelings whether that is good or bad. I think it is good for the speculators and we are all dancing to their tune, even those of us getting excited on this blog. At some later point, they will decide which other currency to push down and then the Euro will look a good buy.

    So we would need a world currency which would be none of the currencies that we have at the moment.


  • Comment number 79.

    #70 kevinb,

    You'd better hope that Havelock's latest additions to Ghia are correct and the UK is actually one of the few places were sustainable life is possible!

    I do agree that there is a lot wrong with both the science and proposed strategies in regard of global warming. However, the 'new' technologies and the tax-type changes could offer Western Europe an edge.

  • Comment number 80.

    It is astonishing that he is 90, he is still so sharp

    A lot of the newer technologies are being explored in the arc between Cambridge and Oxford

    A breakthrough would be timely with fusion and quantum physics in particular

  • Comment number 81.

    Whilst Greece's problems are significant, it will be interesting to see what happens when someone defaults on a derivatives deal. The difference here is that the derivatives market is so much larger than the GDP of the whole world that a bail out is not feasible. Obviously 'net' transactions are much smaller but if someone grabs the money one way and defaults the other ...

  • Comment number 82.

    The enviroment is right for a major breakthrough. All of the indicators are positive (or negative if you prefer). However, nobody can truly predict what or when that breakthrough will be.

    Previously significant change has been promoted by new sources of power and I would hazard a guess that it will be no different this time.

  • Comment number 83.

    I agree

    I would like to see an international effort on desalination, as water shortage on one hand, together with rising sea levels on the other seems to be a no brainer

    Obviously I am aware this technology is being used in the Middle East, yet it is too expensive

    As an island, it would be sensible for us to do this, as opposed to pointless wind technology

  • Comment number 84.

    #51 >>Spain, due to unbelievably high unemployment rates, and economic slavery to the euro

    I think a lot of their unemployment rate is political. During their heyday, they "took in" a lot of Latin Americans on the grounds that they were formerly Spanish that fled during the Franco years. Now that they are "in", they can't be booted out !!

    And the Italians have their "naughty" TV shows to anaesthetise the unemployed masses (bread and circuses ??) !!

    What does that leave ??

  • Comment number 85.

    #53 >>Good luck with the IMF. Greece is a resourceful country and will overcome their current difficulties. They have overcome far greater challenges in their long and splendid history.

    Shades of Leonidas !! Will they dredge up some 300 crazy, suicidal soldiers and hold the IMF off at some pass ?? :-)

  • Comment number 86.

    #75 Stephanieskinkyboots

    The problem with your argument like a number on here who are anti-bisiness is you quote an example from one very end of the scale - a typical case of exaggeration and hyperbole.

    Tescos are higly succesful both domestically and abroad. However, they are 1 of c. 4.2 UK million enterprises (but dropping) the vast majority of whom will need to keep costs reduced and which any increase in NI will be 'like a hole in the head'.

    You also need to understand the impact on public sector enterprises which have to absorb the NI increase (i.e. lead direct to job cuts).

    I notice Cameron made this point the other evening which fell on all-too-deaf ears.

    So if you're going to argue the point then use a representative sample - else you sound just like a (bad) union rep.

    BTW - whilst we're on logic.

    Try this:

    Hi I'm Nick Clegg. I'm a politicain but not like the others. I promise some wonderful fairy tale stuff though nobody's noticed. Me and Vince will form a cabinet. Vote for me!

    You really couldn't make it up. Hopefully this 'voting surge' will blow away as quick as it came but just in case have made the first planning moves to exit the UK pretty sharply.........as I fear that just maybe the UK has really lost its marbles...

    Currently reading the last days of the Roman Empire as a topical guide.............and I'm sure I'm not the only one.........

  • Comment number 87.

    #59 >>As for Greece, Portugal, Spain and others? If African nations can have their 'crippling debts 'cleared' to start afresh - why can this not happen in the EU?

    Well, firstly, what is a "crippling African debt" is considered peanuts in the greater scheme of things. What is a "crippling European debt" is nothing to be sneezed at !! Which of Europe's creditors will simply forgive tens of billions of European debt !! Will their citizens forgive their government for giving awan those tens of billions of their hard earned money ??

    Yes, perhaps this is naive - but why not????

    It is not merely naive, it's avaricious !! Now that the credit card is maxed, you want someone to forgive that debt and allow you to start maxing it again !!

  • Comment number 88.

    #63 >>Of all the big players in the EU I cannot think of a more neutered one than the UK; thogh I think it was more self abuse.

    The mere thought of self-mutiliation gives me the shivers !!

  • Comment number 89.

    #75 If you check the details of Tesco's profits, you find that a significant chunk of it comes from the Far East, particularly from South-east Asia where they are very successful !! For that matter, the biggest Tesco hypermarket in the world is just outside Bangkok and they wouldn't build one there if there wasn't the business to support one !!

    I know that Tesco is a famous British brand but with multinational companies, we have to think outside the pond !!

  • Comment number 90.

    #78 >>So we would need a world currency which would be none of the currencies that we have at the moment.

    How about this - http://news.bbc.co.uk/1/hi/business/8620178.stm - with the backing of the rising creditor countries, this could be possible in the near future !!

    Especially with the IMF calling for more from its members, the BRIC countries can off-load their US and European debts on the IMF as part or all of their contributions !! Dare the Americans complain that their own debt is no good ?? Dare the Europeans complain that Euro debts are worthless ??

  • Comment number 91.

    #84
    "What does that leave ??"

    The good old UK

  • Comment number 92.

    #86
    "who are anti-bisiness"

    bisiness !

    Good lunch Prof :)

  • Comment number 93.

    #79 >>You'd better hope that Havelock's latest additions to Ghia are correct and the UK is actually one of the few places were sustainable life is possible!

    Possibly at the Late Bronze Age level. Since much of Britain's minerals have been mined yonks ago and there's hardly and forests to speak of, Britain must import almost everything (including food) or go without !! With the breakdown of technology due to a lack of spare/replacement parts, civilisation will collapse sharply. How many refridgerator manufacturers are there in Britain ?? Without the ability to store food, large cities will be unsustainable !!

    Without rapid large-scale transportation, food cannot move very far !! Have you ever tried moving a large amount of food at ox-cart speeds ?? 10-12 miles a day, if you are lucky !!

    The economy will be reduced to bartering to a great extent !!

  • Comment number 94.

    #81 >>...but if someone grabs the money one way and defaults the other ...

    He/she will be visited by large gentlemen with very blunt instruments !!

  • Comment number 95.

    #83 >>As an island, it would be sensible for us to do this, as opposed to pointless wind technology

    Britain has absolutely no need for desalination if proper water management is in place. Witness the recent Lake District floods !! In most countries, the lack of water is mostly due to a lack of proper water management.

    Excess water due to storms, etc. are simply allowed to rush to the sea while, during the "dry" season, people are gasping for a drink !! Far too many people have been conditioned into thinking that water always comes out of a tap (if it isn't in the bottled form) !!

    All this needs is some effort and political will. All the technology is already there !! A billion or two spent on water storage and management will go a far, far longer way than pouring them into useless quangos !! This is what a sustainable financial stimulus should be !!

  • Comment number 96.

    57. At 10:25am on 17 Apr 2010, corum-populo-2010 wrote:
    Does anyone know what post#3 @4:44pm 16 April is trying to say?

    However, it's heartening that all views are welcome on the BBC blogs.

    =========
    He's from Smolensk, so he writes riddles wrapped in mysteries inside enigmas. Personally I think he's a retired Somali Pirate, and buying a Butcher's in Smolensk is probably the safest retirement he can find.


  • Comment number 97.

    I think you'll find konnolsky is a spoof.

    If I didn't know any better I reckon this is Ming-the-merciless in disguise because the tongue in cheek humour is exactly the same.

    But I'll let konnolsky share his 'smolensk' views...............

  • Comment number 98.

    86. Rugbyprof wrote:
    "Hi I'm Nick Clegg. I'm a politician but not like the others."

    Do you not think this so called debate is a mistake? We have a House of Commons where once a week a joust takes place, why have this? Smacks a bit of the X-Factor. Lots of talentless folk making the big time because they have TV presence. Has our politics been reduced to this?

    As to Greece, their problems are but a drop in the ocean compared to ours. Heaven help our young folk having to pick up the pieces of Clown Brown's prudent stewardship.

  • Comment number 99.

    For those commenting on Tescos profit announcement, how about Tescos announce those profits and then immediately say they are giong to increase frontline staff wages by the same percentage increase.
    Most Tesco (and by that I mean most supermarket chains) frontline employees are women working on minimum wage. Tescos couldn't achieve all those sales without the frontline staff taking the cash over the counter.

    Tesco (and by that I mean most supermarket chains)by restricting higher employee bonuses and shareholder dividends (I appreciate that some employees benefit frome SAYE schemes) could do more to alleviate the differential between male and female pay than any other sector.(supermarket staff are some of the lowest payed workers in the country and predominantly employ women)

    So you would have to pay another 60 pence per weeks shopping, I'm sure if you feel that is too much you could probably campaign to cut your local authorities CEOs pay package (almost certainly a man)


    £170,000,000,000 overspend this year, so what !, it's only money.

    KevinB, I'm sure that you have valid points to make but surely it would be better to restrict yourself to two maybe three succinct posts, posts that really say what you mean, after all, this is an economics rather than a polotics blog. Don't feel the need to respond immediately to what you see as contrary posts, give others a chance to respond, possibly in your favour.
    Chill, you don't want to burn out, I mean, have you read anything on here that would change your voting pattern ?, have you read anything on here that has made you question your view of the economic world ?

    Don't post rhetoric, post a question that makes me think, better is a difficult quetion that you yourself doesn't know the answer to.

    Which brings me nicely to my question.

    Mark to Market, good or bad ?

  • Comment number 100.

    Meanwhile, here in the Eurozone.

    Spain, been quiet for a while, unemployment hitting 20%, youth unemployment around 40%, but no worries, it's hot and sunny and a thriving black (non-contributary) economy is taking off (just like the old days!)

    Portugal is not the problem, look east young man. (but don't go there)

    Given that this is an economics blog, in the middle of a UK general election, can we take a step back and look at the global situation, what would Mises say, Keynes, old beardy Marx ?

    Is this the end of Days ?

    The world is in turmoil, that much I know.

    Some kind of consensus as to where we want to be in 30 years and where we could be in 50 and 100 years.

    Why am I in competition with my neighbor when it has been shown that working in cooperation is more productive, who stands to gain from this competition ?

 

Page 1 of 4

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.